Kinwal Inc.’s Write-Down of Its Long-Term Plant Asset

Subject: Company Analysis
Pages: 1
Words: 261
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During the writing down process, assets are evaluated on whether they have been depreciated to exhaustion. It is important to consider the long-term plant as part of tangible assets, which depreciate with time until their value is zero. As a result, it is possible to determine whether it is viable to write them. Some of the considerations that are taken include the profitability made from the assets and their ages. Since there could be some productive assets, which have depreciated until their exhaustion, it is crucial for the company to analyze these elements. Based on the findings of the features of the long-term plant of the company, which include property, plant, and equipment, the management can make feasible decisions on the need to write them down.

In this case, the age of the assets is established, and their economic contribution to the company is evaluated. After the analysis, the management decides whether the inclusion of the assets in financial statements is still viable. If the inclusion of the assets in the financial statements represents the wrong picture of the company in terms of its position and performance in the market, the company should consider writing them down. However, in the event that they still portray the real image of the company and are not profitable to the company, writing them down will not be the best decision. As a result, the contribution of the long-term plant and its productive age is vital for any decision concerning the need to write down.